John Walker's Fourmilab Change Log

Friday, November 25, 2011

Reading List: Currency Wars

Debasement of currency dates from antiquity (and doubtless from
prehistory—if your daughter's dowry was one cow and
three goats, do you think you'd choose them from the best
in your herd?), but currency war in the modern sense first
emerged in the 20th century in the aftermath of World War I.
When global commerce—the first era of globalisation—became
established in the 19th century, most of the trading partners
were either on the gold standard or settled their accounts
in a currency freely convertible to gold, with the British
pound dominating as the unit of account in international trade.
A letter of credit financing a shipload of goods exported from
Argentina to Italy could be written by a bank in London and
traded by an investor in New York without any currency risk
during the voyage because all parties denominated the transaction
in pounds sterling, which the Bank of England would exchange for
gold on demand. This system of global money was not
designed by “experts” nor managed by “maestros”—it
evolved organically and adapted itself to the needs of its
users in the marketplace.

All of this was destroyed by World War I. As described here, and in
more detail in
Lords of Finance (August 2011),
in the aftermath of the war all of the European powers on both
sides had expended their gold and foreign exchange reserves in
the war effort, and the United States had amassed a large fraction
of all of the gold in the world in its vaults and was creditor in
chief to the allies to whom, in turn, Germany owed enormous reparation
payments for generations to come. This set the stage for what the
author calls Currency War I, from 1921 through 1936, in which central
bankers attempted to sort out the consequences of the war, often
making disastrous though well-intentioned decisions which, arguably,
contributed to a decade of pre-depression malaise in Britain, the
U.S. stock market bubble and 1929 crash, the
Weimar Germany hyperinflation,
and its aftermath which contributed to the rise of Hitler.

At the end of World War II, the United States was in an even more
commanding position than at the conclusion of the first war. With
Europe devastated, it sat on an even more imposing hoard of gold,
and when it convened the
Bretton Woods conference
in 1944, with the war still underway, despite the conference's list
of attendees hailing from 44 allied nations, it was clear that the
Golden Rule applied: he who has the gold makes the rules. Well, the U.S.
had the gold, and the system adopted at the conference made the U.S. dollar
central to the postwar monetary system. The dollar was fixed to gold
at the rate of US$35/troy ounce, with the U.S. Treasury committed to exchanging
dollars for gold at that rate in unlimited quantities. All other currencies
were fixed to the dollar, and hence indirectly to gold, so that
except in the extraordinary circumstance of a revaluation against the
dollar, exchange rate risk would not exist. While the Bretton Woods system
was more complex than the pre-World War I gold standard (in particular,
it allowed central banks to hold reserves in other paper currencies in
addition to gold), it tried to achieve the same stability in exchange rates
as the pure gold standard.

Amazingly, this system, the brainchild of Soviet agent
Harry Dexter White
and economic charlatan
John Maynard Keynes,
worked surprisingly well until the late 1960s, when profligate
deficit spending by the U.S. government began to cause foreign
holders of an ever-increasing pile of dollars to trade them in
for the
yellow metal.
This was the opening shot in what the author deems Currency War II,
which ran from 1967 through 1987, ending in the adoption of the present
system of floating exchange rates among currencies backed by nothing
whatsoever.

The author believes we are now in the initial phase of Currency War III,
in which a perfect storm of unsustainable sovereign debt, economic contraction,
demographic pressure on social insurance schemes, and trade imbalances
creates the preconditions for the kind of “beggar thy neighbour”
competitive devaluations which characterised Currency War I. This is, in
effect, a race to the bottom with each unanchored paper currency trying to
become cheaper against the others to achieve a transitory export advantage.
But, of course, as a moment's reflection will make evident, with currencies
decoupled from any tangible asset, the only limit in a race to the bottom is
zero, and in a world where trillions of monetary units can be created
by the click of a mouse without even the need to crank up the printing
press, this funny money is, in the words of Gerald Celente, “not
worth the paper it isn't printed on”.

In financial crises, there is a progression from:

Currency war

Trade war

Shooting war

Currency War I led to all three phases. Currency War II was arrested
at the “trade war” step, although had the Carter administration
and Paul Volcker not administered the bitter medicine to the U.S. economy
to extirpate inflation, it's entirely possible a resource war to seize
oil fields might have ensued. Now we're in Currency War III (this is the
author's view, with which I agree): where will it go from here? Well,
nobody knows, and the author is the first to acknowledge that the best a
forecaster can do is to sketch a number of plausible scenarios which might
play out depending upon precipitating events and the actions of decision
makers in time of crisis. Chapter 11 (how appropriate!)
describes the four scenarios Rickards sees as probable outcomes and
what they would mean for investors and companies engaged in international
trade. Some of these may be breathtaking, if not heart-stopping, but
as the author points out, all of them are grounded in precedents which
have already occurred in the last century.

The book begins with a chilling wargame in which the author participated.
Strategic planners often remain stuck counting ships, troops, and
tanks, and forget that all of these military assets are worthless
without the funds to keep them operating, and that these
assets are increasingly integrated into a world financial system
whose complexity (and hence systemic risk, either to an accidental
excursion or a deliberate disruption) is greater than ever before.
Analyses of the stability of global finance often assume players
are rational and therefore would not act in a way which was ultimately
damaging to their own self interest. This is ominously reminiscent
of those who, as late as the spring of 1914, forecast that a general
conflict in Europe was unthinkable because it would be the ruin of
all of the combatants. Indeed, it was, and yet still it happened.

The Kindle edition has the table of contents and
notes properly linked, but the index is just a list of unlinked terms.

Posted at
23:18

Monday, November 21, 2011

Reading List: How the Hippies Saved Physics

From its origin in the early years of the twentieth century
until the outbreak of World War II, quantum theory inspired
deeply philosophical reflection as to its meaning and implications
for concepts rarely pondered before in physics, such as the
meaning of “measurement”, the rôle of the
“observer”, the existence of an objective reality
apart from the result of a measurement, and whether the randomness
of quantum measurements was fundamental or due to our lack of
knowledge of an underlying stratum of reality. Quantum theory
seemed to imply that the universe could not be neatly reduced to
isolated particles which interacted only locally, but admitted
“entanglement” among separated particles which
seemed to verge upon mystic conceptions of “all is one”.
These weighty issues occupied the correspondence and conference
debates of the pioneers of quantum theory including Planck,
Heisenberg, Einstein, Bohr, Schrödinger, Pauli, Dirac, Born,
and others.

And then the war came, and then the war came to an end, and with it
ended the inquiry into the philosophical foundations of
quantum theory. During the conflict, physicists on all
sides were central to war efforts including nuclear
weapons, guided missiles, radar, and operations research,
and after the war they were perceived by governments as
a strategic resource—subsidised in their education
and research and provided with lavish facilities in return
for having them on tap when their intellectual capacities
were needed. In this environment, the education and culture
of physics underwent a fundamental change. Suddenly the field
was much larger than before, filled with those interested
more in their own careers than probing the bottom of deep
questions, and oriented toward, in Richard Feynman's words,
“getting the answer out”. Instead of debating
what their equations said about the nature of reality, the motto
of the age became “shut up and calculate”, and
physicists who didn't found their career prospects severely
constrained.

Such was the situation from the end of World War II through the
1960s, when the defence (and later space program) funding gravy
train came to an end due to crowding out of R&D budgets
by the Vietnam War and the growing financial crisis due to
debasement of the dollar. Suddenly, an entire cohort of
Ph.D. physicists who, a few years before could expect to
choose among a variety of tenure-track positions in academia
or posts in government or industry research laboratories,
found themselves superbly qualified to do work which
nobody seemed willing to pay them to do. Well,
whatever you say about physicists, they're nothing if
they aren't creative, so a small group of out of the box
thinkers in the San Francisco Bay area self-organised
into the
Fundamental
Fysiks Group and began to re-open the deep puzzles
in quantum mechanics which had laid fallow since the
1930s. This group, founded by Elizabeth Rauscher and George Weissmann,
whose members came to include
Henry Stapp, Philippe Eberhard, Nick Herbert, Jack Sarfatti,
Saul-Paul Sirag, Fred Alan Wolf, John Clauser, and Fritjof
Capra, came to focus on
Bell's theorem
and its implications for
quantum entanglement,
what Einstein called “spooky action at a distance”,
and the potential for instantaneous communications not
limited by the speed of light.

The author argues that the group's work, communicated through
samizdat circulation of manuscripts, the occasional publication
in mainstream journals, and contact with established researchers
open to considering foundational questions, provided the impetus
for today's vibrant theoretical and experimental investigation of
quantum information theory, computing, and encryption. There is
no doubt whatsoever from the trail of citations that Nick Herbert's
attempts to create a faster-than-light signalling device led directly
to the
quantum no-cloning theorem.

Not only did the group reestablish the prewar style of doing physics,
more philosophical than computational, they also rediscovered the
way science had been funded from the Medicis until the advent of
Big Science. While some group members held conventional posts,
others were supported by wealthy patrons interested in their work
purely from its intellectual value. We encounter a variety of
characters who probably couldn't have existed in any decade other
than the 1970s including
Werner Erhard,
Michael Murphy,
Ira Einhorn,
and
Uri Geller.

The group's activities ranged far beyond the classrooms and laboratories
into which postwar physics had been confined, to the thermal baths
at
Esalen and
outreach to the public through books which became worldwide bestsellers
and remain in print to this day. Their curiosity also wandered well
beyond the conventional bounds of physics, encompassing ESP (and
speculating as to how quantum processes might explain it). This
caused many mainstream physicists to keep members at arm's length,
even as their insights on quantum processes were infiltrating the
journals.

Many of us who lived through (I prefer the term “endured”)
the 1970s remember them as a dull brown interlude of broken dreams,
ugly cars, funny money, and malaise. But, among a small community
of thinkers orphaned from the career treadmill of mainstream physics,
it was a renaissance of investigation of the most profound questions
in physics, and the spark which lit today's research into quantum
information processing.

The Kindle edition has the table of contents,
and notes properly linked, but the index is just a useless
list of terms. An
interview
of the author, Jack Sarfatti, and
Fred Alan Wolf by George Knapp on
“Coast to Coast AM” is available.

Posted at
22:01

Friday, November 11, 2011

Recipes: Jamaican Jerk Paleo Meatloaf

Here is a further modified version of the Fourmilab Plausibly Paleo Meatloaf recipe which is more spicy and hence interesting. This is a recipe by and for hotheads—if you don't like spicy food, give this one a pass. If you're unsure about the chamber pressure you can sustain in the interest of yumminess, halve the amount of jerk seasoning in the recipes below and work up to your own level of maximum pleasure.

My own flavour of “paleo” is “all but condiments”. I adhere to the paleo guidelines for main ingredients, but admit non-paleo components in the seasonings which render food tasty. This means that if there's some non-paleo substance in jerk paste or Worcestershire sauce, that's fine with me because it's just a seasoning, a small fraction of the mass of the result, and worth the risk in exchange for making an otherwise bland dish a pleasure to eat.

Preheat the oven to 175°C in circulating air mode if available. Place the cracked eggs, garlic, jerk seasoning, and Worcestershire sauce in a bowl and blend until well mixed. Peel, slice and finely chop the onions. Put the ground pork, beef, chopped onion, and blended eggs and spices into a large bowl and mix well. I use “garlic in a tube” purée—substitute six cloves of crushed fresh garlic if you prefer.

Mould into a glass or aluminium baking pan and place in the preheated oven. If the pan is over-full, it may bubble over, so if you're worried, place a baking tin beneath the pan. Let it bake for 90 minutes; if you prefer going by core temperature, look for 72°C in the middle of the meatloaf.

Remove from the oven and if there's fat around the outside of the pan, drain it and feed it to the hogs or otherwise dispose of it responsibly. Let the meatloaf cool; if you indulge immediately, slices are prone to disintegrate as you remove them from the pan.

This recipe makes about four servings. It's great as leftovers, either cold or reheated.

You may be tempted to put catsup on this this tasty treat. But we can do better.

Mix the prepared mayonnaise and jerk seasoning together, ideally letting the mix stand for an hour or so before serving. Spread on slices of the meatloaf and enjoy! As with the meatloaf recipe, if you find this too hot, simply reduce the ratio of jerk paste to mayonnaise until you're happy with it.

Wednesday, November 9, 2011

Reading List: Righteous Indignation

Andrew Breitbart has quickly established himself as the quintessential
happy warrior in the struggle for individual liberty. His
breitbart.com and
breitbart.tv sites
have become “go to” resources
for news and video content, and his ever-expanding constellation of
“Big” sites
(Big Hollywood,
Big Government,
Big Journalism, etc.)
have set the standard for group blogs which break news
rather than just link to or comment upon content filtered
through the legacy media.

In this book, he describes his personal journey from growing up
in “the belly of the beast”—the Los Angeles
suburb of Brentwood, his party days at college, and
rocky start in the real world, then discovering while watching
the Clarence Thomas confirmation hearings on television, that
much of the conventional “wisdom” he had uncritically
imbibed from the milieu in which he grew up, his education, and
the media just didn't make any sense or fit with his
innate conception of right and wrong. This caused him to embark
upon an intellectual journey which is described here, and a new
career in the centre of the New Media cyclone, helping to create
the Huffington Post, editing the
Drudge Report, and then founding his own media
empire and breaking stories which would never have seen
the light of day in the age of the legacy media monopoly, including
the sting which brought down ACORN.

Although he often comes across as grumpy and somewhat hyper
in media appearances, I believe Breitbart well deserves the
title “happy warrior” because he clearly
loves every moment of what he's doing—striding into
the lion's den, exploding the lies and hypocrisy of his
opponents with their own words and incontrovertible audio and
video evidence, and prosecuting the culture war, however
daunting the odds, with the ferocity of Churchill's Britain
in 1940. He seems to relish being a lightning rod—on his
Twitter feed,
he “re-tweets” all of the hate messages he receives.

This book is substantially more thoughtful than I expected; I went
in thinking I'd be reading the adventures of a gadfly-provocateur,
and while there's certainly some of that, there is genuine depth
here which may be enlightening to many readers. While I can't assume
agreement with someone whom I've never met, I came away thinking
that Breitbart's view of his opponents is similar to the one I
have arrived at independently, as described in
Enemies.
Breitbart describes a “complex” consisting of the legacy
media, the Democrat party, labour unions (particularly those of
public employees), academia and the education establishment, and organs
of the regulatory state which reinforce one another, ruthlessly suppress
opposition, and advance an agenda which is inimical to liberty and the
rule of law. I highly recommend this book; it far exceeded my
expectations and caused me to think more deeply about several things
which were previously ill-formed in my mind. I'll discuss them below,
but note that these are my own thoughts and should not be attributed
to this book.

While reading Breitbart's book, I became aware that the seemingly
eternal conflict in human societies is between slavers: people
who see others as a collective to be used to “greater ends”
(which are usually startlingly congruent with the slavers' own self-interest),
and individuals who simply want to be left alone to enjoy their lives,
keep the fruits of their labour, not suffer from aggression, and be
free to pursue their lives as they wish as long as they do not aggress
against others. I've re-purposed
Larry Niven's
term “slavers”
from the
known space
universe to encompass all of the movements over the tawdry millennia
of human history and pre-history which have seen people as the
means to an end instead of sovereign beings, whether they called
themselves dictators, emperors, kings, Jacobins, socialists,
progressives, communists, fascists, Nazis, “liberals”,
Islamists,
or whatever deceptive term they invent tomorrow after the most
recent one has been discredited by its predictably sorry results.
Looking at all of these manifestations of the enemy as slavers
solves a number of puzzles which might otherwise seem contradictory.
For example, why did the American left so seamlessly shift its
allegiance from communist dictators to Islamist theocrats who,
looked at dispassionately, agree on almost nothing? Because they
do agree on one key point: they are slavers, and that
resonates with wannabe slavers in a society living the
twilight of liberty.

Breitbart discusses the asymmetry of the tactics of the slavers and
partisans of individual liberty at some length. He argues that
the slavers consistently use the amoral
Alinsky playbook while their opponents
restrict themselves to a more constrained set of tactics
grounded in their own morality. In chapter 7, he presents
his own “Pragmatic Primer for Realistic Revolutionaries”
which attempts to navigate this difficult strait. My own view,
expressed more crudely, is that
“If
you're in a fair fight, your tactics suck”.

One of the key tactics of the slavers is deploying the mob into the
streets. As documented by Ann Coulter in
Demonic, the mob has been an integral
part of the slaver arsenal since antiquity, and since the French
revolution its use has been consistent by the opponents of
liberty. In the United States and, to a lesser extent, in other
countries, we are presently seeing the emergence of the “Occupy”
movement, which is an archetypal mob composed of mostly clueless cannon
fodder manipulated by slavers to their own ends. Many dismiss this
latest manifestation of the mob based upon the self-evident vapidity
of its members; I believe this to be a mistake. Most mobs in history
were populated by people much the same—what you need to look at
is the élite vanguard who is directing them and the greater
agenda they are advancing. I look at the present manifestation of the
mob in the U.S. like the release of a software product. The present
“Occupy” protests are the “alpha test”: verifying
the concept, communication channels, messaging in the legacy media, and
transmission of the agenda from those at the top to the foot soldiers.
The “beta test” phase will be August 2012 at the Republican
National Convention in Tampa, Florida. There we shall see a mob raised
nationwide and transported into that community to disrupt the nomination
process (although, if it goes the way I envision
infra, this may be attenuated and be
smaller and more spontaneous). The “production release” will be
in the two weeks running up the general election on November 6th, 2012—that
is when the mob will be unleashed nationwide to intimidate voters,
attack campaign headquarters, deface advertising messages, and try to
tilt the results. Mob actions will not be reported in the legacy
media, which will be concentrating on other things.

One key take-away from this book for me is just how predictable
the actions of the Left are—they are a large coalition of groups of
people most of whom (at the bottom) are ill-informed and incapable of critical
thinking, and so it takes a while to devise, distribute, and deploy the kinds
of simple-minded slogans they're inclined to chant. This, Breitbart argues,
makes them vulnerable to agile opponents able to act within their
OODA loop,
exploiting quick reaction time against a larger but more lethargic opponent.

The next U.S. presidential election is scheduled for November 6th, 2012,
a little less than one spin around the Sun from today. Let me go out on
a limb and predict precisely what the legacy media will be talking
about as the final days before the election click off. The Republican
contender for the presidency will be Mitt Romney, who will have
received, in the entire nomination process, a free pass from legacy
media precisely as McCain did in 2008, while taking down each
“non-Romney” in turn on whatever vulnerability they can
find or, failing that, invent. People
seem to be increasingly resigned to the inevitability of Romney
as the nominee, and on the
Intrade prediction market
as I write
this, the probability of his nomination is trading at 67.1%
with Perry in second place at 8.8%.

Within a week of Romney's nomination, the legacy media will, in
unison as if led by an invisible hand, pivot to the whole
“Mormon thing”, and between August and November 2012,
the electorate will be educated through every medium and
incessantly until, to those vulnerable to such saturation and
without other sources of information, issues such as structural
unemployment, confiscatory taxation, runaway regulation,
unsustainable debt service and entitlement obligations,
monetary collapse, and external threats will be entirely
displaced by discussions of
golden plates,
seer stones,
temple garments,
the Book of Abraham,
Kolob,
human exaltation,
the plurality of gods,
and other aspects of Romney's religion of record, which will be presented
so as to cause him to be perceived as a member of a cult far outside the
mainstream and unacceptable to the Christian majority of the nation
and particularly the evangelical component of the Republican base (who
will never vote for Obama, but might be encouraged to stay home rather
than vote for Romney).

In writing this, I do not intend in any way to impugn Romney's credentials
as a candidate and prospective president (he would certainly be a tremendous
improvement over the present occupant of that office, and were
I a member of the U.S. electorate, I'd be happy affixing a
“Romney: He'll Do” bumper sticker to my
Bradley Fighting
Vehicle), nor do I wish to offend any of my
LDS
friends.
It's just that if, as appears likely at the moment, Romney becomes
the Republican nominee, I believe we're in for one of the ugliest
religious character assassination campaigns ever seen in the history
of the Republic. Unlike the 1960 campaign (which I am old enough to
recall), where the anti-Catholic animus against Kennedy was mostly
beneath the surface and confined to the fringes, this time I expect
the anti-Mormon slander to be everywhere in the legacy media,
couched, of course, as “dispassionate historical reporting”.

This will, of course, be shameful, but the slavers are shameless.
Should Romney be the nominee, I'm simply saying that those who see
him as the best alternative to avert the cataclysm of a second
Obama term be fully prepared for what is coming in the general
election campaign.

Should these ugly predictions play out as I envision, those who
cherish freedom should be thankful Andrew Breitbart is on our
side.

Posted at
23:34

Monday, November 7, 2011

Google™ Page Rank Query Updated

About a month ago Google changed the URL used by third party queries of PageRank™. This broke my Perl program which supports PageRank queries from the command line, a Web form, or embedded in a Web page.

I have just posted an
update to the Page Rank Query distribution which incorporates an updated
WWW::Google::PageRank Perl module which supports the modified request URL. If you have customised my Perl program, you need not modify your page_rank.pl program; you need only replace WWW::Google::PageRank with the updated (0.17) version.

If your own Perl programs which use this module to query PageRank have broken recently, updating the Perl module on your system should fix them.

Posted at
19:54

Saturday, November 5, 2011

Reading List: Takedown

This is the fifth in the author's
Scot
Harvath series, which began with
The Lions of Lucerne (October 2010).
In this episode, Harvath, an agent for a covert branch of the
U.S. Department of Homeland Security, completes a snatch
and exfiltration of a terrorist bombmaker granted political
asylum in Canada, delivers him into custody in Manhattan,
and plans to spend a lazy fourth of July holiday in the Big
Apple with one of his closest friends, a Delta Force operative
recently retired after a combat injury. Their bar-hopping agenda
is rudely interrupted by an escalating series of terrorist attacks
which culminate in bridge and tunnel bombings which,
along with sniper and rocket-propelled grenade attacks on boat
and air traffic, isolate Manhattan from the mainland and inflict
massive civilian casualties.

As Harvath establishes contact with his superiors, he discovers he
is the only operative in the city and, worse, that a sequence
of inexplicable and extremely violent attacks on targets
irrelevant to any known terrorist objective seems to indicate
the attacks so far, however horrific, may be just a diversion and/or
intended to facilitate a further agenda. Without support or hope
of reinforcement from his own agency, he recruits a pick-up team
of former special operators recovering from the physical and
psychological consequences of combat injuries he met at the
Veterans Affairs hospital New York as the attacks unfolded and
starts to follow the trail of the terrorists loose in Manhattan.
As the story develops, layer after layer of deception is revealed,
not only on the part of the terrorists and the shadowy figures
behind them and pulling their strings, but also within the U.S.
government, reaching all the way to the White House. And if
you thought you'd heard the last of the dinky infovore Troll and
his giant
Ovcharkas,
he's back!

This is a well-crafted thriller and will keep you turning the pages.
That said, I found it somewhat odd that a person with such a sense of
honour and loyalty to his friends and brothers in arms as Harvath
would so readily tolerate deception among his superiors which led
directly to their deaths, regardless of the purported “national
security” priorities. It is indicative of how rapidly
the American Empire is sliding into the abyss that outrageous
violations of human rights, the rule of law, and due process
which occur in this story to give it that
frisson of edginess that Thor
seeks in his novels now seem tame compared to remote-controlled
murder by missile
of American citizens in nations with which the U.S.
is not at war ordered by a secret committee on the sole
authority of the president. Perhaps as the series progresses, we'll
encounter triple zero agents—murder by mouse click.

The president's press secretary does not write
his speeches. This is the job of speechwriters,
one or more of whom usually accompanies the
president even on holiday. (Chapter 18)

The Surgeon General is not the president's personal
physician. (Chapter 42)

If I were rappelling through a manhole several stories
into the bowels of Manhattan, I think I'd use a high
tensile strength tripod rather than the “high tinsel”
tripod used in chapter 59. Now if the bad guy was way up
in a Christmas tree….

In chapter 100, the Troll attaches a “lightweight
silencer” to his custom-built rifle firing the
.338 Lapua
sniper round. Even if you managed to fit a suppressor to
a rifle firing this round and it effectively
muffled the sound of the muzzle blast (highly dubious), there
would be no point in doing so because the bullet remains
supersonic more than a kilometre from the muzzle (depending
on altitude and temperature), and the shock wave from the bullet
would easily be audible anywhere in Gibraltar. Living
across the road from a rifle range, I'm acutely aware
of the sound of supersonic bullets coming more or less
in my direction, and these are just
5.56 and
7.62 NATO,
not Lapua “reach out and whack someone” ammo.